This is will detail when you will need a Repair Agreement / Repair Holdback.
Description
Repair reserves are used when specific items are identified as needing repair at the time of closing - typically for minor items. This differs from a replacement reserve which covers items likely requiring either routine, ongoing maintenance and/or replacement after closing and during the term of the loan.
For example, a repair reserve could require Borrower to repair a cracked sign in the parking lot within 60 days of closing.
User Interface
To enter this example into the system please follow the below steps:
Step 1: Navigate to the "Property" tab and select "yes" to Repair Agreement
Step 2: Navigate to the Holdback Page (click on the link next to yes)
Step 3:Enter all necessary information (see example below)
The customer will then need to answer if repairs are already in progress select "yes". If repairs have not been started select "no".
Lender Protections of the Repair Holdback Agreement
Please be advised that our Repair Holdback Agreement provides certain lender protections you should be aware of.
First, the Holdback Amount shall only be disbursed for the payment or reimbursement of the Lender-approved costs for completion of the Repairs (agreed to in the RHA).
Second, at the Lender's option Lender may make disbursement directly to the applicable contractors, laborers, and materialmen.
Third, Prior to disbursement of the Holdback Amount, Borrower needs to deliver to Lender a written request for each release accompanied by evidence satisfactory to Lender that the applicable Repairs have been completed and paid for by Borrower. At Lenders' discretion, Borrower must also pay for and deliver to Lender either a Contractors Certificate, a Borrower's Certificate, Engineer's or Inspector's Certificate, an endorsement to the title policy for the lien of the Mortgage, or other certificates. The borrower's certificate must state, in part, that the Repairs have been fully paid for and no claim or claims exist against Borrower or against the Mortgaged Property or Improvements out of which a lien based on furnishing labor or material exists or might ripen.
Fourth, according to paragraph 1(c) the Borrower can make no departure from or alterations to the Schedule of Required Repairs without the Lender's prior written consent.
Lastly, according to section F.1 of the Loan Agreement, any fraud or misrepresentation or material omission by Borrower in connection with any request for Lender's consent to any proposed action, including a request for disbursement of funds under any Collateral Agreement (the RHA) is an Event of Default.
GoDocs Software Output Sample
Repair Agreement Sample Linked Here